Why do poor people spend so much money on brand-name items and flashy status symbols? The answer is power. Those Calvin Klein boxers are a desperate attempt at compensation. Here’s Kevin Lewis of the Globe Ideas section:

If people low on the socioeconomic ladder sometimes buy things beyond their means, it may be because of a psychological mechanism that we all share. At Northwestern University, several experiments with students tested the idea that people who feel relatively powerless have a greater desire for high-status goods. The participants were primed to feel either powerful or powerless by having them recall corresponding personal experiences. The participants then indicated their willingness to pay for various products, some that were generic and others that conveyed status (e.g., an executive pen). Those who were reminded of their powerlessness were willing to pay a premium, but only for high-status goods – as a way to regain a sense of power. The authors conclude that “it is those low in socioeconomic status that might be most inclined to pay price premiums, which might lead to a downward spiral of constantly spending beyond one’s means in order to compensate for low power.”

Comments

After attending a morning lecture at the local Medical School, I was overwhelmed by all the Rolex Watches on the student’s wrists. Their distribution among otherwise impoverished students does add credence to your theory: Ratio 2 to 1 Males over Females with Rollies. I strongly suspect that you don’t wear a status watch.

At one of our faculty meetings (I teach high school science), we were addressed by a well-known author/motivator/former principal. She had worked in some of Chicago’s worst schools. She described a parent meeting in which she brought up the subject of the parent’s child wearing $100 sneakers but claiming to be unable to afford a calculator for a math class. The mother’s response: “I don’t want anybody to know we are poor.”

Correct me if I am wrong but wasn’t there a time when being poor was not shameful? When we didn’t look down on and marginalize the poor? What has changed or is my recollection incorrect?

I would recommend Dr. Ruby Payne’s A Framework for Understanding Poverty. This study seems to have a very narrow focus when compared to the socio-economic factors of the difference between generational and situational poverty. Payne would explain the need to spend on items like shoes, clothes, cell phones, etc, as an expression of the value system where money is not counted upon and should be used on an “as-is-earned” basis. This helps explain a lack of savings and prioritization that align with middle-class/upper-class values. Her study is more comprehensive and very interesting.

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